Abercrombie & Fitch may try to attract "cool, good-looking" customers and employees, but the retailer's financial performance is just ugly. So much for summer girls, and anyone else for that matter, liking Abercrombie.
Teens, particularly girls, are ditching Abercrombie as well its sister brand Hollister. Same store sales, a key measure for retailers, tumbled 10% during the second quarter, leading to worse-than-expected earnings and revenue for the retailer. Shares of Abercrombie (ANF) plunged nearly 18% Thursday following the earnings news.
Will things turnaround soon? Fat chance. Abercrombie said same-store sales next quarter will be down even more, and its earnings outlook was far below what analysts were predicting. The company didn't even offer guidance beyond the third quarter "due to a lack of visibility given recent traffic trends."
The retailer, as well as rivals American Eagle (AEO) and Aeropostale (ARO) have been struggling for some time now as the tastes of teens and young millennials have shifted from classic jeans, logo T-shirts and hoodies toward more fashion-forward chains like Forever 21, H&M, as well as Urban Outfitters (URBN), which delivered strong results earlier in the week.
Through Abercrombie failed to warn earlier in the quarter that it would deliver poor results, the Twittersphere didn't seem all that surprised.
Some also speculated that company's financial troubles may be a result of Abercrombie's CEO Mike Jeffries comments from 2006, which were resurrected in May after a retail expert suggested that the company may not carry XL and XXL sizes for women because it doesn't consider plus-sized women to be among the "cool" teens it's going after.
In an interview with Salon.com more than seven years ago, Jeffries said that the company hires "good-looking people" because they attract "other good-looking people, and we want to market to cool, good looking people."
Others were hoping Abercrombie's dismal results may force it to rethink the way it does business beyond just its marketing strategy.
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Abercrombie & Fitch's stock surged more than 30% Wednesday, logging the biggest one-day jump since its stock market debut in 1996.
The big move came as the teen retail giant posted its first quarter of year-over-year profit growth in a year. For the three months ended Oct. 27, Abercrombie earned $71.5 million, or 87 cents per share, up 40% from a year earlier. Overall revenue rose 9% for the quarter to MOREHibah Yousuf - Nov 14, 2012 12:16 PM ET
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